Microeconomics Answers

critically discuss the effects of social grants on incomes and welfare

Suppose that there are 250 identical individual consumers in the market for commodity X, each with a demand function given by d_x = 6-P_x and 50 identical producers of commodity X, each with a supply function given by s_x =5P_x. (8 Marks)

a)     Derive the market demand function and the market supply function for commodity X.

b)     Compute the market equilibrium price and equilibrium quantity mathematically.

c)     Tabulate the market demand schedule and the market supply schedule for commodity X.

d)    show whether surplus or shortage occurs at 

i)                   P = 2

ii)                 P = 5

Mr. Karim is planning to pursue MBA studies. Initial inquiry shows that he will have to pay RM 24,000 as tuition fee, buy books for RM 1,000, and pay for transport RM 1,000. The MBA study programme will extend over 18 months. Mr Karim is working now with a salary of RM 3,000 per month. Being a full time student, he will have to forego the income from his present job for the period of study.

Work out:  (a) Financial cost, and (b) the Economic Cost of doing MBA

(Hint: Identify implicit costs and explicit costs)

If there is Savings in this Circular model, then what would eventually happen to income and revenue?

4.​Suppose the demand for inject printers is estimated to be 

   Q= 1000-2p+5Px-3Py+0.1Y

  P=80   Px= 20     Py= 150       Y= 1000

A.​Calculate price elasticity of demand? (2 pt) 

B.​Calculate cross price elasticity of x and y (Exy)? And state the nature of good 

C.​Calculate income elasticity of demand and what we can say about the goods

When someone’s kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the price.

Calculate the consumer surplus for the demand function P = 25/Q+2 when the market price P = 5.

In equilibrium a consumer was buying 5 units of good A and some of good B. His

income was Rs 100 and the prices were P A = Rs 8 and P B = Rs 5. The price of good A

falls to Rs 5. By how much does his income need to be compensated so that he is able to

buy the (old) bundle at the original equilibrium?

determinants of demand leads to a movement along the demand curve or a shift in the demand curve.

determinants of supply leads to a movement along the supply curve or a shift in the supply curve.